Editor’s Letter

Bankstas in the Age of Money

Surrounded as we are these days by financial malfeasance on such an epic scale, the amount of time and money spent hunting down the facts as to whether former Major League pitcher Roger Clemens and seven-­time Tour de France cycling champ Lance Armstrong took performance-­enhancing drugs to gain an edge is something of a mystery. When an actor gives a cocaine-fueled, Oscar-winning performance, do we take his award away? Do we reclaim a singer’s Grammy, or put an asterisk after it in the record books, when we discover that he was ramped up on illegal substances? Why all the outrage over athletes? The recent Clemens trial involved his alleged perjury before a 2008 congressional committee, when he denied using performance-enhancing drugs. The case consumed more than two years of federal prosecutors’ time, cost the government an estimated $2 million to $3 million, and resulted in an acquittal.

Let’s face it, who among us wouldn’t take a pill or potion that would make us better at our job? Goodness knows, we abuse substances for just about everything in our personal lives; why not in our professional lives as well? Writers, artists, composers, and other practitioners of the lonely arts have historically relied on a trio of little helpers: booze, coffee, and cigarettes. They’re not illegal, but the first one, used in quantity, can certainly kill you. And the last one, if the anti-smoking lobby is to be believed, can kill not just you but those around you as well.

The government’s attitude toward different professions is striking. With sports scandals, it zeros in on individuals. But when it comes to banks, federal authorities go after the institutions—when they go after anything at all. The people at the center of a financial scandal are almost never touched, and most walk away with compensation packages that would make a cable-news anchor or a talk-show host blush. In Clemens’s case, you’d think he had stolen money from widows and orphans, so fevered was the government’s wish to pin something on him. He should have gone into the true American pastime of our age: banking, a profession that actually has been clipping money from widows and orphans over the past decade. Clemens might have walked away from his troubles the way Angelo Mozilo, the former C.E.O. of Countrywide Financial Corp., did. As the man at the top of one of the principal subprime lenders responsible for the 2008 financial crisis—and a tabloid-ready poster boy for general subprime-loan quasi-criminality—Mozilo slithered away from the mess he helped create without spending a day in jail, hit with only a fine of $67.5 million, or about 10 percent of his net worth at the time.

Granted, the government hasn’t totally turned a blind eye toward dodgy banking activities. But don’t expect the findings of various investigations to affect the individual perpetrators. HSBC, the British-based financial-services giant, is at the center of a U.S. regulatory probe, accused of laundering money for Mexican drug cartels and Middle East banks with ties to terrorists. Barclays, another U.K. behemoth, has been going through withering scrutiny in London. It’s accused—two American banks are also under suspicion—of fixing libor, an inter-bank lending rate, a crime that affects virtually every person on the planet who owes money, which is to say most people on the planet. HSBC C.E.O. Stuart Gulliver and American smoothie Bob Diamond, the former Barclays head, will likely head off into the wilderness with the yoke of scandal around their necks, but with handsome exit packages that should soothe the rash.

Alternatively, Clemens could have gone into politics instead of baseball. One could argue that the lawmakers responsible for overseeing the runaway lending that led to the financial crisis are every bit as responsible as the banks. But not a single elected official has served time in jail or even suffered much of a setback, professionally. Can you name one elected official who has even apologized for his or her part in the mess? (Aside from a semi-contrite Bill Clinton, who has admitted he erred in signing the 2000 bill that deregulated derivatives.) Senate banking-committee chairman Chris Dodd got a V.I.P. reduction in his mortgages from Countrywide on his homes in Washington, D.C., and Connecticut. His argument was that he didn’t know he was receiving special treatment from a company he had oversight on. Nobody really swallowed that whopper, inasmuch as his forms from the lender were flagged with the letters “F.O.A.,” for Friends of Angelo. Dodd walked away from government and into the hands of the Motion Picture Association of America, where he is now chairman and C.E.O. at a reported base salary of $1.5 million a year.

Finally, Clemens might have been better off going into big-time tax evasion, fraud, racketeering, and trading with the enemy, like the fugitive financier Marc Rich. He lived abroad for a while and then was famously pardoned by Bill Clinton on the final day of his scandal-ridden White House tenure. Or Clemens could simply have married someone with Rich’s professional ethics, like Denise Rich did—it was her vigorous fund-raising for Clinton and the Democratic Party that reportedly led to her ex-­husband’s pardon. Ms. Rich’s recent decision to give up her U.S. passport to live abroad, and out of the clutches of the I.R.S., is a fitting coda to the tawdry Rich saga. She claims she made the move to be closer to her family, but no one believes that; she gave up her U.S. citizenship in what looks to the world like a flagrant act of tax avoidance. As the law stands, expatriates like her, and Facebook billionaire Eduardo Saverin, who gave up his American citizenship to live in tax-friendly Singapore, are allowed to return to the U.S. for up to 120 days a year. I have a better deterrent for this sort of behavior: don’t let them back in the country. Ever.

Karl Rove. Just saying that name aloud in mixed company can start a heated debate, and usually one with no middle ground, although even Democrats agree that Rove is a brilliant political mind, and one of the best strategists ever—after all, it was his legerdemain that got Bush elected twice (which, if you remember the Bush accomplishments as well as I do, was no small feat).

It was the Supreme Court’s 2000 Bush v. Gore decision that got Rove into the White House, where he earned the nickname “Bush’s Brain”—a hurtful pejorative if there ever was one. (Bush himself preferred to call Rove “Turd Blossom.”) And it was another Supreme Court decision that ushered Rove back into the spotlight after he left the Bush White House in a cloud of scandal in 2007 and took up residence in the right-wing echo chamber of Fox News and *The Wall Street Journal’*s op-ed page.

In Citizens United v. Federal Election Commission, which was decided in January 2010, the high court struck down both the McCain-Feingold Act’s restrictions on corporate and union spending surrounding elections and a 1990 decision that restricted spending by corporations to support or oppose political candidates. Citizens United made it legal for individuals and corporations alike to raise unlimited amounts of money and to make unlimited expenditures on political ads, whenever, wherever, and however they like, in the name of a political-­action committee. In another twist, if you register your group as a nonprofit, you don’t need to disclose where your money came from. So, suddenly, the new rules are … well, there are no rules. Rove quietly created a super-pac, American Crossroads, and a sister nonprofit, Crossroads GPS, and began raising money for his own organizations and then installing deputies and allies within the Romney campaign.

As contributing editor Craig Unger reports in “Boss Rove,” on page 228, the Republican strategist has found himself with a legal war chest approaching $1 billion for the 2012 election. For scale, consider that John McCain’s entire budget for his presidential campaign in 2008 was less than $400 million. If you live in a swing state, you’ve probably been seeing Rove’s handiwork for months already—and if you haven’t, get ready for the assault.